Many new 600 series control listings created by the President’s Export Control Reform (“ECR”) Task Force use the term “‘specially designed’ for military use.” This is a compound term reliant on proper application of the new Task Force definition for “specially designed” and a determination of whether an item is “for military use.”
The “for military use” term is a broad catch-all that was discussed in a recently published Department of Commerce rule transferring export jurisdiction over certain military electronics items from Department of State to Department of Commerce control:
“The commenter stated that ‘military use’ is not a performance level or a characteristic. The function of ‘military use’ is achieved by any military use. Therefore, under this definition, there is no difference between ‘specially designed for military use’ and just ‘military use.’” [F/N 1]
In its response to the comment, the Task Force advised it has decided to replace “military use” in several control listings with the phrase “military application.” The Task Force explains that the “military application” term does not control items merely because the military uses them, but instead controls items that are “specially designed” to “perform a military function or activity.” [F/N 2] The Task Force further explains:
“. . . the phrase ‘‘‘specially designed’ for a military application’’ provides adequate specificity and clarity to distinguish items that are developed in ways that enable them to perform a military role or function from items that, although used by the military, are indistinguishable from items that are widely used in civil activities.” [F/N 3]
The Problem with “Military Application”
At present, the new Task Force interpretation of “military application” only exists in supplementary information that is not part of the regulations. As such, the information necessary to a correct determination of whether an item is “specifically designed for a military application” is now among the many other Task Force interpretations hidden in an ever-growing volume of Federal Register notices.
The failure to properly codify the scope of the new term in the regulations is a particular problem in differentiating between the “military application” and “military use” terms because the words “use” and “application” are synonyms. [F/N 5] As a result, exporters reviewing control listings that use the “military application” term who do not know of the recent Task Force interpretation are likely to apply the common meaning of the term “application” and classify an item as subject to control merely because the military uses the item.
The Problem with “Military Use”
By replacing references to “military use” in certain control listings with “military application,” the Task Force acknowledged problems identified by the commenter in the recent rule. However, the rule does not provide any information on whether the Task Force plans to replace the term in other control listings. In addition, the Task Force still needs to confirm the specific scope of what it means by “military use” for those control listings that continue to use the term.
Another Irony of Reform?
As noted above, a stated goal of ECR is to create a positive control list. However, the Task Force regularly uses “military use” and “military application” in many of the new control listings created by ECR and these catch-all terms are broader than the previous catch-all control that existed before reform at former ITAR Section 120.3.
The former Section 120.3 catch-all defined controlled articles as “specifically designed, developed, configured, adapted, or modified for a military application.” As broad as it was, former Section 120.3 had a carve-out from control for items with predominant civil applications and performance equivalents to items used for civil applications. [F/N 5]
The new Task Force definition for specially designed contains “Section (b) release” provisions that are somewhat similar to the former Section 120.3 carve-out, but these release provisions in “specially designed” do not apply to end items, systems, equipment, or upper level assemblies. As a result, the Task Force “’specially designed’ for military use” and “’specially designed’ for a military application” catch-all controls are apparently much broader than the primary catch-all in place before reform.
* * *
[F/N 1] “Revisions to the Export Administration Regulations (EAR): Control of Military Electronic Equipment and Other Items the President Determines No Longer Warrant Control Under the United States Munitions List (USML),” 79 Fed. Reg. 37551, 37555 (July 1, 2014).
[F/N 2] Ibid. at 37555 to 37557.
[F/N 3] Ibid.
[F/N 4] N.B. Merriam-Webster definitions of “use” and “application” cross-reference each other, see http://www.merriam-webster.com/dictionary/use (defining “Use” as: “a method or manner of employing or applying something.”) and http://www.merriam-webster.com/dictionary/application(defining “Application” as “a use to which something is put.”).
[F/N 5] See former 22 C.F.R. Section 120.3 (Policy on Designating and Determining Defense Articles and Services), which provided:
An article or service may be designated or determined in the future to be a defense article (see § 120.6) or defense service (see § 120.9) if it:
(a) Is specifically designed, developed, configured, adapted, or modified for a military application, and
(i) Does not have predominant civil applications, and
(ii) Does not have performance equivalent (defined by form, fit and function) to those of an article or service used for civil applications; or
(b) Is specifically designed, developed, configured, adapted, or modified for a military application, and has significant military or intelligence applicability such that control under this subchapter is necessary.
*The above is not intended as an exhaustive list of restrictions that may apply to a particular transaction nor advice for a specific transaction because the specifics of an individual case may implicate application of other U.S. laws as well as foreign laws that carry added or different requirements. In addition, U.S. export control and sanctions laws are frequently subject to change. Such changes can affect the continued validity of the information above, which is based on U.S. law existing as of July 7, 2014. For these reasons, assistance from a qualified attorney competent to advise on such matters is highly recommended.
Matthew A. Goldstein is an International Trade Attorney in Washington D.C. licensed to practice in the District of Columbia. He can be reached at (202) 550-0040 and Matthew@GoldsteinPLLC.com.